IMPACT OF COVID-19 ON INTERNATIONAL TRADE:

LESSONS FOR AFRICAN LDCs

PRACHI AGARWAL
School of Social Sciences
Jawaharlal Nehru University
New Delhi, India

and

MULENGA CHONZI MULENGA

School of Social Sciences
Mulungushi University
Kabwe, Zambia

Type of Contribution: Policy Brief

Word Count: 3994 words
Keywords: African LDCs, Essential Goods, Building resilience

A contribution to the Policy Hackathon on Model Provisions for Trade in Times of

Crisis and Pandemic in Regional and other Trade Agreements

Disclaimer: The author declares that this paper is his/her own autonomous work and that all
the sources used have been correctly cited and listed as references. This paper represents the
sole opinions of the author and it is under his/her responsibility to ensure its authenticity. Any
errors or inaccuracies are the fault of the author. This paper does not purport to represent the
views or the official policy of any member of the Policy Hackathon organizing and
participating institutions.

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 Table of Contents
ABSTRACT ............................................................................................................................................................................ 3
HIGHLIGHTS ........................................................................................................................................................................ 3
INTRODUCTION .................................................................................................................................................................. 6
KNEEJERK POLICY RESPONSES TO THE PANDEMIC .............................................................................................. 7
IMPACT OF THE PANDEMIC ON LDCS IN AFRICA ................................................................................................... 9
RESPONDING TO COVID-19 PANDEMIC: BEST PRACTICES FROM AROUND THE WORLD .................... 11
POLICY RECOMMENDATIONS FOR AFRICAN LDCS ............................................................................................. 13
REFERENCES ..................................................................................................................................................................... 16

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 ABSTRACT

The COVID-19 pandemic has highlighted the lack of provisions in existing trade agreements
to tackle such a crisis. Advanced and emerging countries, fearing issues of food and national
security, have responded with knee-jerk policy measures to promote national production,
reshoring of manufacturing, and to reduce dependence on trade. This will adversely affect the
least-developed countries (LDCs) in Africa due to their high dependence on trade and low
levels of diversification. Proposals have been made by various countries to the WTO to ensure
the free flow of trade in essential goods and maintain supply chain connectivity. Hence, there
is scope for African LDCs to sign future plurilateral agreements with existing, economically-
advanced trade partners, to ensure that no new protectionist measures will be erected against
the LDCs during crisis periods, while also promoting production at home. Further trade
cooperation between LDCs in Africa within the AfCFTA framework can provide an
opportunity to promote resilient regional trade relations through construction of disaster-proof
supply chains of essential, and non-essential goods and services. Maintaining food security in
these African LDCs is of utmost importance and can be an effective bargain in future trade
agreements.

HIGHLIGHTS

 COVID-19 has disrupted international trade and global supply chains for essential and
non-essential goods and services.

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 The most profound impact of the pandemic was felt by trade-dependent least-developed
countries located on the African continent due to reliance on exports of commodities
and tourism as well as imports of medical, pharmaceutical and food products.
 Many countries have tried to keep trade open to reduce the negative impact on
vulnerable populations around the world. For example, they have announced policy
measures to ensure supply of essential goods and maintain supply chain connectivity.
 However, many countries have implemented inward-looking measures to protect their
domestic markets in the form of export bans, import restrictions and subsidies to
import-substituting industries to reduce dependence on imported goods and improve
self-reliance.
 The restrictive policy measures are likely to be disastrous for LDCs in Africa and may
spark a health and food crisis in the region. Closing of borders means that essential
commodities cannot be moved to vulnerable regions, thus depriving people of the
much-needed health care and food supplies.
 LDCs could initiate implementation of trade facilitation measures such as the creation
of customs ‘Green Lanes’ to expedite the clearance of essential commodities imported
from regional partners particularly during pandemic times. It is also recommended that
countries promote the modernization of customs procedures through the increased use
of digital solutions and promotion of paperless trade. However, access to information
is very limited in the region. Hence it is advised that LDCs find ways to reduce the cost
of internet services to seamlessly facilitate international trade.
 MSMEs form the backbone of the African economy as well as the regional value chains
on the continent. This current crisis has highlighted the need to support MSMEs in the
region through the creation of a formal business regulatory framework, providing
business development services and helping reconnection to international value chains
post the crisis.
 AfCFTA is the ideal setting to expand regional relations and increase coordination of
development policies.
o Support to the public health sector through promotion of experience-sharing
among nations in epidemiological research and development and bolstering
regional epidemic preparedness for future crises.

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 o Encourage the development of a regional post-pandemic recovery plan to
restore connectivity, tourism, normal business activities, and improve economic
stability of the region.
o Advocate monetary support from member states to reduce financial impact.
o Provide a platform for plurilateral agreements with major extra-regional
partners to ensure continuous supply in essential goods including pharma and
food products during crisis periods.
o Promote the fragile export sector, improve regional value chains, resolve
transportation and logistical issues and find sustainable solutions to future
crises.
 There is an urgent need to reduce incidence of food insecurity in the region. Perhaps
food security could be used as a bargaining chip in future trade negotiations with the
rest of the world.

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INTRODUCTION

COVID-19 has been declared a “public health emergency of international concern” by the
World Health Organization.1 As of recent estimates, there are about fifteen million cases in the
world with over half a million deaths. This global pandemic has led to market failure in most
countries around the world and a decline in global economic growth prospects.2 It poses a threat
to international trade and is likely to erode the gains made towards trade liberalization over the
past few decades. Its adverse effects on trade are projected to be more severe than those of the
2008-09 Global Financial Crisis (GFC) because it has impacted both aggregate demand and
supply leading to the disruption in global value chains, especially in the trade of essential goods
and services.3 Hence, the collapse in the production activity as well as the breakdown in
logistics network has severe implications for producers and consumers in various countries.4
In addition to the effects of the GFC, the restriction in movement on account of social
distancing has further restricted the availability of labor and transport, leading to shut down in
various dependent sectors of the global economy. 5 Of these, the worst affected countries will
be the most vulnerable least-developed countries (LDCs) that remain overly-reliant on
international trade in goods and services.

The lack of cooperation between countries to tackle this crisis has exacerbated the economic
situation of the world, in turn, adding to geopolitical tensions and distrust between trading
partners.6 In the midst of such challenges and uncertainty, countries are faced with a
dichotomous set of choices, they can either retreat into overt geopolitical competition and build
a world that is divided, uncertain, hostile and protectionist, or they can call upon the
international community to overcome this crisis through collective action.7 Today, we see an
apparent shift from ‘hyper-globalization’ towards state-led nation-building and self-sufficiency
to protect from future vulnerabilities. However, this seems like a short-term solution to the
problem; in the long-run countries are bound to re-approach the pragmatism of international
cooperation and interdependence. This long-term solution requires smaller-subsequent steps
towards building a common contingency plan and persuasion of shared norms and treaties.8

This paper is structured as follows: Section 1 summarizes the kneejerk trade policy measures
taken by emerging and advanced countries to protect their economies during this crisis; section
2 highlights the negative impact of the COVID-19 pandemic on LDCs in Africa. Section 3 then

1 World Health Organization, “Rolling Updates on Coronavirus disease”, Updated 11 June 2020,
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/events-as-they-happen (accessed on June 17, 2020).
2 Emilie Besson, “COVID-19: Panic buying and its impact on global health supply chains”, World Bank Blogs. 2020,

https://blogs.worldbank.org/health/covid-19-coronavirus-panic-buying-and-its-impact-global-health-supply-chains (accessed
on June 16, 2020).
3 International Monetary Fund, “Coronavirus (COID-19): Joint Actions to Win the War”, 2020,
https://www.oecd.org/about/secretary-general/Coronavirus-COVID-19-Joint-actions-to-win-the-war.pdf (accessed on June
17, 2020).
4 Adnan Seric, Holger Görg. Saskia Mösle and Michael Windisch, “Managing COVID-19: How the pandemic disrupts global

value chains”, UNIDO Department of Policy Research and Statistics, 2020, https://iap.unido.org/articles/managing-covid-19-
how-pandemic-disrupts-global-value-chains (accessed on June 16, 2020).
5 World Trade Organization, “Trade set to plunge as COVID-19 pandemic upends global economy”, WTO Press Release, 8

April 2020, https://www.wto.org/english/news_e/pres20_e/pr855_e.htm (accessed on June 18, 2020).

6 Robert Muggah, David Steven and Liv Tørres, “We urgently need major cooperation on global security in the COVID-19

era” World Economic Forum, 23 Apr 2020, https://www.weforum.org/agenda/2020/04/we-need-major-cooperation-on-

global-security-in-the-covid-19-era/ (accessed on June 18, 2020).
7 Ngaire Woods, “Global Governance: Planning for the World After COVID-19”, Chapter 1 in Challenges and Opportunities

in the Post-COVID-19 World, World Economic Forum, May 2020,

http://www3.weforum.org/docs/WEF_Challenges_and_Opportunities_Post_COVID_19.pdf (accessed on June 18, 2020).
8
Foreign Policy, “How the World Will Look After the Coronavirus Pandemic”, 2020,
https://foreignpolicy.com/2020/03/20/world-order-after-coroanvirus-pandemic/ (accessed on June 19, 2020).

6
summarizes the best practices from around the world to support global supply chains and
international trade. Finally, the last section recommends ways to alleviate the burden of the
pandemic on the African LDCs and increase trade resilience in future crises.

KNEEJERK POLICY RESPONSES TO THE PANDEMIC

In the last few decades, manufacturing came to be organized in global value chains (GVCs).
Countries relied on production networks for supply of raw materials as well as intermediate
products. Although the expansion of GVCs slowed down substantially after the GFC of 2008-
099 10, they continued to constitute a substantial part of global trade. Along with this, countries
have also embraced greater regional trade cooperation, especially in the European Union, South
East Asia and the Americas.11 Since the GFC, the number of regional trade agreements (RTAs)
in force (including bilateral free trade agreements) have increased from just 214 in 2010 to 303
in 2020.12 There is also evidence to show that the RTA utilization rate has increased in recent
years13 owing to a rise in intra-regional trade and development of regional value chains.14
However, these agreements rarely prescribe trade rules in case of a national or international
emergency. Therefore, the lack of any provisions in existing RTAs to tackle such a crisis
situation has led to development of economic fear such that a health concern has
metamorphosed into issues of national security, food security and the need for industrial
independence among nations around the world.

Advanced and emerging countries like Japan, India, the United States, members of the
European Union, Saudi Arabia, and the Republic of Korea, among others have responded with
knee-jerk policy measures to promote national production by building domestic capacity in
strategic sectors and reshoring part of their production closer home. For example, the United
States has turbo-charged efforts to reduce dependency on Chinese supply chains. They have
offered companies tax incentives and potential re-shoring subsidies to move manufacturing
back home.15 They are also contemplating creation of an Economic Prosperity Network
consisting of trade ‘friends’ namely, Australia, India, Japan, New Zealand, South Korea and
Vietnam to reduce reliance on China.16 Japan too offered subsidies to shift production out of
China, some back home to Japan, while others to various South East Asian countries.17 India
launched ‘The Invest India Business Immunity Platform’ to ensure a steady supply of inputs to

9 Xin Li, Bo Meng and Zhi Wang, “Recent patterns of global production and GVC participation”, in Technological innovation,
supply chain trade and workers in a globalized world (Geneva: World Trade Organization, 2019).
https://www.wto.org/english/res_e/booksp_e/gvc_dev_report_2019_e_ch1.pdf
10
World Development Report 2020: Trading for Development in the Age of Global Value Chains (World Bank Publications,
2019).
11 Japan External Trade Organization (JETRO), “Post-Financial Crisis Trade-Restrictive Measures and the Need

for Discipline in International Trade” in International Trade After the Economic Crisis: Challenges and New Opportunities
(Geneva: United Nations Publication, 2010), 20.
12 The list of all regional trade agreements (RTAs) in force is available at http://rtais.wto.org/UI/PublicAllRTAList.aspx
13 JETRO, “Post-Financial Crisis Trade-Restrictive Measures and the Need for Discipline in International Trade”, 22-24.
14 Richard Baldwin, “Global supply chains: why they emerged, why they matter, and where they are going” in Global value

chains in a changing world, Eds. Deborah K. Elms and Patrick Low (Geneva: WTO Publications, 2013).
15 Reuters, “Export Controls and Export Bans over the Course of the Covid-19 Pandemic”, 2020,
https://www.reuters.com/article/us-health-coronavirus-usa-china/trump-administration-pushing-to-rip-global-supply-chains-
from-china-officials-idUSKBN22G0BZ (accessed on June 21, 2020).
16 Rajesh Chadha, “Fractured Global Value Chains post COVID-19: Can India gain its missed glory?”, 2020,

https://www.brookings.edu/blog/up-front/2020/05/11/fractured-global-value-chains-post-covid-19-can-india-gain-its-
missed-glory/, (accessed on June 21, 2020).
17 “Coronavirus Impact: Japan to offer $2.2 billion to firms shifting production out of China”, 2020,

https://www.businesstoday.in/current/world/coronavirus-impact-japan-to-offer-22-billion-to-firms-shifting-production-out-
of-china/story/400721.html, (accessed on June 21, 2020).

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support industrial production during the ongoing disruption in international supply chains.18
This initiative coincided with the government’s announcement to promote self-reliance in
manufacturing during this pandemic, primarily to reduce imports from China and supplement
the growth of import-substituting industries.19 Similarly, members of the European Union,
particularly Germany increased production capacity of the home-based pharmaceutical
industry to ensure a localized supply of essential drugs and counter the disruption in the supply
of similar imports.20 France, on the contrary, called for overall restructuring of supply chains
to ensure ‘sovereign’ and ‘independent’ suppliers instead of overly relying on Chinese imports
of intermediary products.21 22 Clearly, these inward-looking industrial and trade policies are
rooted in the need to promote independent and sovereign industrial units as well as reduce
reliance on supply chains. While these measures can be justified as need-of-the-hour, they tend
to also have a large fiscal impact. Moreover, economists have questioned their viability as they
may be counterproductive in nature. For instance, production-based subsidies can be anti-
competitive and lead to the development of partisanship towards certain commercial interests.

The second leg of the nationalistic trade policy was implemented by countries in the form of
export bans on essential items such as food, agricultural inputs, and medical goods. For
example, the EU restricted exports of personal protective equipment (PPEs), the United States
announced an export ban on all protective gear, China strictly controlled for exports of medical
supplies, Argentina increased export duties on some chemicals and essential foodstuffs, while
India imposed restrictions on exports of certain pharmaceutical products.23 Although these
export bans were implemented to meet increased domestic demand, they tend to have far-
reaching and adverse effects on countries that remain reliant on imported goods due to their
limited production capacity.24 Moreover, export restrictions lead to price rises, disruption in
supply chains, delays and lost capacities in production.25 This situation was exacerbated as
countries also conferred differential treatment towards imports originating in countries
severely affected by COVID-19 due to sanitary and health fears. Several countries such as
Egypt, Georgia, Jordan, and Russia have entirely prohibited or partially restricted imports of
animal-based products from China for sanitary and phyto-sanitary reasons.26

Various trade-restricting measures coupled with policies to reduce dependence on international

supply chains, are likely to erase the economic progress made through trade liberalization in
the past few decades. While it is hoped that developed and emerging economies will be able to
revive economic growth in the latter half of this decade, the most vulnerable economies will
be burdened with extreme consequences for the majority of the foreseeable future. Hence, there

18
“Invest India Business Immunity Platform launched to helping businesses withstand COVID-19”, 2020,
https://pib.gov.in/PressReleasePage.aspx?PRID=1607905 (accessed on June 21, 2020).
19 “Aatma Nirbhar Bharat Isn't Protectionism, But Making India Self-Reliant: Amitabh Kant”, 2020,
https://www.outlookindia.com/magazine/story/india-news-indian-sectors-must-serve-both-domestic-and-global-
demand/303300 (accessed on June 21, 2020).
20 “EU brings production home amid supply chain worries”, 2020, https://www.thepharmaletter.com/article/eu-brings-

production-home-amid-supply-chain-worries (accessed on June 21, 2020).

21 Seric, Görg, Mösle and Windisch, “Managing COVID-19: How the pandemic disrupts global value chains”.
22 To balance these negative international sentiments, China injected a strong economic stimulus to balance this perceived

reshoring from China and to support its GDP through an emphasis on scaling domestic production in strategic sectors. More
information at: Frauke Austermann, Wei Shen and Assen Slim, “Governmental responses to COVID-19 and its
economic impact: a brief Euro-Asian comparison”, Asia Europe Journal No. 18 (2020) 213.
23 “Export Controls and Export Bans over the Course of the Covid-19 Pandemic” (Berlin: Federation of German Industries

(BDI), 2020).
24 WTO, “Information Note: Export Prohibitions and Restrictions”, 23 April 2020, p. 8,
https://www.wto.org/english/tratop_e/covid19_e/export_prohibitions_report_e.pdf (accessed on June 20, 2020).
25
BDI, “Export Controls and Export Bans over the Course of the Covid-19 Pandemic”
26 Full information on trade-restricting measures by countries is available at https://www.macmap.org/en/covid19 .

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is a need to minimize this negative impact through implementation of least-harmful trade
measures, while ensuring their subsequent removal when deemed appropriate by the country.

IMPACT OF THE PANDEMIC ON LDCs IN AFRICA

The disruption in international trade due to COVID-19 will hit LDCs hard. Most LDCs are
dependent on trade as a driver of economic growth, accounting for an average of fifty-three
percent of their GDP in 2018 27. Their small domestic markets together with low levels of
diversification28 make them particularly vulnerable to external shocks29. Thirty-three of the
world’s forty-seven LDCs are located in Africa and will be severely affected as a result of the
trade-restrictive policies announced by various countries around the world. The devastating
effects will range from slowdown in economic growth, to job and productivity losses, and even
bankruptcies.30

Given Africa predominantly exports commodities like oil, minerals, cocoa and coffee, the
imminent threat is to the disruption in supply chains owing to lower demand in global markets
for their exports.31 The growth slowdown across the world will thus mean lower export
earnings for these African exporters. Most LDCs in Africa also rely on inputs from developed
economies. For instance, African industries import over 50 percent of their industrial
machinery and transport equipment from trade partners located outside the continent; the most
important suppliers are in Europe (35 percent), China (16 percent) and India (14 percent).32
Hence, COVID-19-related disturbances in supply chains, especially in those located in China
and Europe, will lead to a decrease in the availability of imported final and intermediate
goods.33

The worst impact will be felt in imports of medical and pharmaceutical products. The recent
export restrictions on medical supplies adopted by EU, the United States, and India, are harmful
to the healthcare sector in import-dependent African countries.34 35 Statistics show that Africa
imports around 90 percent of its pharmaceutical products from outside the continent, including
the European Union (51.5 percent), India (19.3 percent), Switzerland (7.7 percent), China (5.2
percent), the United States (4.3 percent) and the United Kingdom (3.3 percent).36 This

27 Latest data is available at https://data.worldbank.org/indicator/NE.TRD.GNFS.ZS?locations=ZF

28 United Nations Conference on Trade and Development (UNCTAD), The Least Developed Countries Report 2019 - The
present and future of external development finance – old dependence, new challenges (Geneva: UN Publications, 2019), 13.
29 UNCTAD, The Least Developed Countries Report 2019, 19.
30 Trade Law Center for Southern Africa (TRALAC), “COVID-19 in Africa – some reflections on trade matters”, 2020,

https://www.tralac.org/news/article/14564-covid-19-in-africa-some-reflections-on-trade-matters.html, (accessed on June 20,

2020).
31 Kartik Jayaram, Acha Leke, Amandla Ooko-Ombaka, and Ying Sunny Sun, “Tackling COVID-19 in Africa: An unfolding

health and economic crisis that demands bold action,

https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Middle%20East%20and%20Africa/Tackling%20COV
ID%2019%20in%20Africa/Tackling-COVID-19-in-Africa-final.ashx (accessed on June 20, 2020).
32 OECD, “COVID-19 and Africa: Socio-economic implications and policy responses”, 2020,
http://www.oecd.org/coronavirus/policy-responses/covid-19-and-africa-socio-economic-implications-and-policy-responses-
96e1b282/ (accessed on June 19, 2020).
33 ibid
34 OECD, “Speeding Up Africa’s Response to Covid-19: What Can Technology, Manufacturing and Trade Do?”, 2020,

http://www.oecd.org/coronavirus/policy-responses/covid-19-and-africa-socio-economic-implications-and-policy-responses-
96e1b282/ (accessed on June 22, 2020).
35 Annalisa Primi, Stephen Karingi, Lily Sommer, et al., “Accelerating the response to COVID-19: what does Africa

need?”, https://oecd-development-matters.org/2020/05/01/accelerating-the-response-to-covid-19-what-does-africa-need/
(accessed on June 20, 2020).
36
United Nations Economic Commission for Africa (UNECA), “Policy Brief: Economic Impact of the COVID-19 on Africa”,
https://www.uneca.org/publications/policy-brief-impact-covid-19-africa (accessed on June 20, 2020).

9
disruption in imports also reduces the availability of COVID-related supplies such as oxygen,
hydrogen peroxide, disinfectants, personal protective gear and surgical tools, among others37.
The external restrictive policy shocks threaten to expose the continent to severe health and
economic risks. Therefore, countries need to exercise a degree of caution while implementing
restrictive policies during the on-going crisis to ensure a continuous and unhindered supply of
medical goods and basic foodstuffs to LDCs.

In addition to these external policy changes, African countries have also instituted domestic
policy measures to counter the effects of this pandemic through nationwide lockdowns in a
number of countries, including Kenya, Uganda, Republic of the Congo, Botswana, Zimbabwe
and South Africa.38 However, these lockdown measures are likely to have damaging effects on
their economies. For example, restrictions imposed by South Africa will impact vital regional
supply chains across southern and east Africa as it is a key driver of intra-Africa exports.39
These measures will affect not only the supply of medical equipment, medicines and personal
protective equipment but also supply of agricultural goods that are important for food insecure
households in Africa.40 In addition, they also threaten informal cross-border trade (ICBT),
which forms a substantial part of the overall trade in Africa. Estimates show that ICBT
accounted for 30-40 percent of total intra-regional trade in the SADC region and 40 percent in
the COMESA region in 2017.41,42 Evidence also suggests that ICBT plays an important role in
food security and poverty alleviation, hence any disruptions to this form of trade through
protectionist measures such as closure of borders threaten to throttle the functioning of these
informal markets at a time of general global economic malaise.43

The impact of COVID-19 on Africa trade is likely to vary across the individual economies.44
Commodity exporters such as Algeria, Angola, Cameroon, Chad, Equatorial Guinea, Gabon,
Ghana, Nigeria, and the Republic of the Congo have been the most affected due to reduced
demand that has resulted in price declines and exchange rate instabilities.45 Of these, the oil
exporting LDCs will be additionally affected by disagreements on how to stabilize prices, with
recent oil prices slumping by over 50 percent.46 Prices for metal and mineral commodities have
also plummeted by more than 20 percent, slashing export earnings and potentially reducing
FDI inflows in countries specializing in production of these commodities.47 Countries like
Zambia, South Sudan and Mauritania, which primarily export to China, are likely to suffer due
to Chinese protectionist measures that have reduced its demand for imports from these
economies.48

37 More information is available at www.trademap.org

38
ibid
39 Trudi Hartzenberg, “Covid-19 in Africa – Some Reflections on Trade Matters. Trade for Development, Enhanced Integrated

Framework”, 2020, https://trade4devnews.enhancedif.org/en/op-ed/covid-19-africa-some-reflections-trade-matters (accessed

on June 18, 2020).
40 TRALAC, “COVID-19 in Africa – some reflections on trade matters”.
41 Christopher Changwe Nshimbe and Inocent Moyo (eds.), Migration, Cross-Border Trade and Development in Africa:

Exploring the Role of Non-State Actors in the SADC Region. (Palgrave MacMillan, 2017).
42 Hartzenberg, “Covid-19 in Africa”.
43 John Stuart, “Informal Cross Border Trade in Africa in a Time of Pandemic”, TralacBlog, 2020,

https://www.tralac.org/blog/article/14487-informal-cross-border-trade-in-africa-in-a-time-of-pandemic.html (accessed on
June 22, 2020).
44 OECD, “COVID-19 and Africa: Socio-economic implications and policy responses”
45 ibid
46 UN (2020). COVID-19 and the least developed countries. UN/DESA Policy Brief #66. Available at

https://www.un.org/development/desa/dpad/publication/un-desa-policy-brief-66-covid-19-and-the-least-developed-
countries/
47
Hartzenberg, “Covid-19 in Africa”
48 OECD, “COVID-19 and Africa”.

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Furthermore, given nearly two-thirds of African countries are net importers of basic food,
crisis-induced shortages will severely impact food availability in the region, adding to pre-
existing food security pressures, especially in countries heavily dependent on food imports
such as Mauritania, Liberia, Sierra Leone, and Gambia.49 Likewise, many small traders in
countries such as Mozambique, Niger, Nigeria, and Uganda will be extremely affected by the
pandemic as they earn their livelihood by trading in Chinese-made textiles, electronics, and
other household goods.50 For tourist-dependent countries, particularly small island economies
such as Mauritius, Seychelles and Madagascar, travel restrictions and prohibitory advisories
by authorities have limited tourist inflows as well as their revenue base.51, 52 Additionally,
reduced demand for migrant workers amidst the travel bans has drastically reduced
remittances, which are an essential component of GDPs of Nigeria, Ghana and Kenya.53The
fiscal position of many countries including Sudan, Eritrea, Cabo Verde and Egypt is also likely
to deteriorate due to additional government spending on supplying medical resources,
maintaining a low unemployment rate, subsidizing micro, small and medium enterprises
(MSMEs) and at the same time, foregoing tax revenues through suspension of certain taxes
and reduced social security contributions.54 Moreover, Africa is likely to experience delayed
or reduced foreign direct investment (FDI) as partners from other continents redirect capital
locally to support their domestic economic transition.55

RESPONDING TO COVID-19 PANDEMIC: BEST PRACTICES FROM AROUND

THE WORLD

Despite the protectionist measures implemented by several countries, many countries around
the world continue to believe that international trade and supply chains must be protected
during this COVID-19 pandemic for shared benefits across the global community. Countries
have sent proposals and declarations to the World Trade Organization to ensure open and free
trade as well as to build resilience of international production networks in case of future crises.
These declarations form a series of best practices that have set the stage for global recovery
from the COVID-19 pandemic.

One of the earliest initiatives taken was in the form of a joint declaration by Australia, Brunei,
Canada, Chile, Laos, Myanmar, Singapore and Uruguay that guaranteed continuous
commitment to preserve supply chain connectivity by refraining from application of new tariff
or non-tariff barriers and supporting the transportation network.56 Two weeks later, member
states of the Association of the Southeast Asian Nations (ASEAN) emphasized on community
response to the pandemic by strengthening cooperation between ASEAN members on matters
of public health, regional epidemic preparedness, openness of regional markets for trade and
investment, and recovery of ASEAN economies post COVID-19.57 A similar declaration on

49 ibid
50 ibid
51 Hartzenberg, “Covid-19 in Africa”.
52 International Monetary Fund, “Policy Responses to COVID-19- Policy Tracker”, 2020, https://www.imf.org/en/Topics/imf-

and-covid19/Policy-Responses-to-COVID-19 (accessed on June 22, 2020).

53 TRALAC, “COVID-19 in Africa – some reflections on trade matters”.
54 OECD, “COVID-19 and Africa”.
55 TRALAC, “COVID-19 in Africa – some reflections on trade matters”.
56 New Zealand: Foreign Affairs and Trade, “Joint Ministerial Statement affirming commitment to ensuring supply chain

connectivity amidst the COVID-19 situation”, 14 April 2020, https://www.mfat.govt.nz/en/media-and-resources/ministry-

statements-and-speeches/joint-ministerial-statement-affirming-commitment-to-ensuring-supply-chain-connectivity-amidst-
the-covid-19-situation/ (accessed on June 24, 2020).
57
“ASEAN declaration and statements on Covid-19”, 1 May 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/210.pdf (accessed on June 24, 2020).

11
maintaining regional supply chain connectivity was also made by members of the Asia-Pacific
Economic Cooperation (APEC) that focused on coordination in information-sharing on
policies for economic recovery. It also highlighted the need to harness the digital economy to
advance regional economic growth.58

Advanced countries such as Australia, Canada, New Zealand, Republic of Korea and Singapore
were the first set of nations to declare intention of facilitating resumption of essential cross-
border business travel59. This declaration was an extension of the ministerial statement issued
by the G20 member countries that aimed to lay a solid foundation for global economic
recovery, while maintaining food security, reducing unnecessary stock-piling of food and
providing humanitarian aid in the form of restriction-free exports of medical supplies and
PPEs.60 The declaration further recommended the facilitation of flow in essential goods
through e-commerce well as through strengthening of logistic networks (air, land, marine) to
build the resilience of supply chains, and provide greater support MSMEs.61 Fifty advanced
and developing countries including the EU emphasized on alleviating the negative impact of
COVID-19 on MSMEs and committed to further integrate MSMEs in international trade, and
accelerate their access to digital technology.62 The African Union Commission also established
an MSME platform to monitor, benchmark, and allow firms to share their experiences and
challenges, as well as to provide support to businesses to overcome the challenges posed by
the COVID-19 pandemic.63

Later, twenty-nine countries along with the EU responded to the impact of the pandemic on
agricultural trade and food security. Given, these countries constitute for over sixty-seven
percent of exports of agri-products and sixty percent of such imports, they felt responsible for
conserving agricultural supply chains and ensuring that food import-dependent countries have
unhindered access to food products. They accepted that export restriction on food products will
create ‘a widespread food insecurity crisis’ and called for the removal of such barriers by G20
countries and other WTO members.64 Correspondingly, the Cairns Group of countries
recognized the need to facilitate agricultural trade, limit price-distortions, reject protectionism
and create a more market-oriented agricultural trading system.65 Finally, the statement by the
Ottawa Group called for increased engagement by each and every member of the WTO for a
sustainable economic recovery.66

58
“Statement on COVID-19 by APEC Ministers Responsible for Trade”, 8 May 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/213.pdf (accessed on June 24, 2020).
59 “Joint Ministerial Statement on COVID-19”, 13 May 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/214.pdf (accessed on June 24, 2020).
60 “G20 Trade and Investment Meeting: Ministerial Statement”, 20 May 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/216.pdf (accessed on June 24, 2020).
61 ibid
62 “Statement on Highlighting the importance of MSMEs in the time of COVID-19”, 26 May 2020,

https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/215.pdf , (accessed on June 24, 2020).

63 African Union Development Agency (AUDA-NEPAD), “Supporting African MSMEs Through Post-COVID-19 Crisis: The

100,000’s MSMEs Initiative.” https://www.nepad.org/supporting-african-msmes-through-and-post-covid-19-crisis-100-000s-

msmes-initiative, (accessed on July, 3 2020).
64 “ Responding to the COVID-19 pandemic with open and predictable trade in agricultural and food products”, 29 May 2020,

https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/208R2.pdf , (accessed on June 24, 2020).

65 “COVID-19 Initiative: Protecting Global Food Security through Open Trade”, 17 June 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/218.pdf , (accessed on June 24, 2020).
66
“June 2020 Statement of the Ottawa Group: Focusing Action on COVID-19”, 16 June 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/217.pdf , (accessed on June 24, 2020).

12
POLICY RECOMMENDATIONS FOR AFRICAN LDCs

Many lessons can be drawn by African LDCs from the aforementioned best practices to protect
international trade and prevent similar crises in the future. First and foremost, there is a need
for the LDCs to scrutinize the lockdowns initiated by them that have interrupted vital supply
chains within the continent. Closing of borders has deprived the vulnerable regions of essential
healthcare and food supplies. These LDCs, therefore, could initiate implementation of trade
facilitation measures such as the creation of customs ‘Green Lanes’ to expedite the
clearance of essential commodities imported from regional partners particularly during
crisis times. These Green Lanes that have already been employed in China and the EU, help
facilitate quick inspection and release of imported essential products most needed in LDCs.67

Second, this current crisis has highlighted the need for African LDCs to support MSMEs
in the region. MSMEs form the backbone of the African economy as well as the regional value
chains that exist in the continent, representing more than 90 percent of businesses and
employing about 60 percent of workers, many of whom are women and youth.68 In Sub-
Saharan Africa, most of the intra-regional trade in food and other consumer goods is conducted
through these MSMEs.69 Regional value chains already exist in the continent, albeit, in an
informal setting, including the tea industry in East Africa, livestock between the Sahel and Gulf
of Guinea, or cassava in West Africa.70 The COVID-19 pandemic has disrupted their
functioning across the continent. The African Union Commission has already responded to the
economic impact of the COVID-19 on MSMEs through the establishment of a specialized
platform71. However, there is further scope for policy measures aimed at creating a formal
business regulatory framework, providing business development services (BDS), tax and non-
tax incentives, and helping MSMEs reconnect to international value chains post the crisis.72

Third, most countries have already introduced physical distancing measures that limit the
handling of custom documents at the border. As a result, digital solutions have been
instrumental in doing business across all sectors of the global economy during the pandemic.73
Hence, it is recommended that LDCs promote the modernization of customs procedures
through the increased use of digital solutions and promotion of paperless trade to make
cross-border business transactions more convenient and transparent while also ensuring
regulatory compliance.74 However, access to information via networked systems such as the
internet and mobile phones is very limited mainly due to high access costs, lack of competition,
and restrictive government regulation on entry of new players. This makes it particularly
challenging to conduct international trade throughout the region. These LDCs therefore need

67 UNECA, “Trade Policies for Africa to Tackle Covid-19”, 27 March, 2020.

68 International Trade Centre, “Promoting SME Competitiveness in Africa: Data for De-risking Investment”, Geneva,
September 2018.
69 Archana Jatkar and Chenai Mukumba, “Unpacking the Bali Package: A Snapshot of the Bali Ministerial Decisions of the

WTO Members”, CUTS International Discussion paper, 2014, https://www.cuts-citee.org/pdf/Unpacking_the_Bali_Package-

A_Snapshot_of_the_Bali_Ministerial_Decisions_of_the_WTO_Members.pdf, accessed on July 3, 2020).
70 Maxime Weigert and Mohamed El Dahshan, “Regional Value Chains: Africa’s Way Forward”, 26 February, 2019,

https://yaleglobal.yale.edu/content/regional-value-chains-africas-way-forward (Accessed on 3 July 2020)

71 African Union Development Agency (AUDA-NEPAD), “Supporting African MSMEs Through Post-COVID-19 Crisis: The

100,000’s MSMEs Initiative.” https://www.nepad.org/supporting-african-msmes-through-and-post-covid-19-crisis-100-000s-

msmes-initiative, (accessed on July, 3 2020).
72 ibid
73 Ibid
74
“June 2020 Statement of the Ottawa Group: Focusing Action on COVID-19”, 16 June 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/217.pdf , (accessed on June 24, 2020).

13
to reduce the cost of internet services to seamlessly facilitate international trade through
a centralized digital platform.

Fourth, as the African Continental Free Trade Agreement (AfCFTA) draws closer to its
entry into force, a number of important lessons can be drawn from other regional
economic bodies such APEC and ASEAN). Although under the guise of the AfCFTA
countries have already proposed measures to establish trade corridors for essential
commodities and accelerate Africa’s industrial development75, there is an opportunity for
further intervention and support in the public health sector. Based on the proposals by
ASEAN and APEC countries, the AfCFTA can perhaps include provisions that ensure
members share their experiences and best practices in epidemiological research and
development, clinical treatment, enhancing capacity for the public health systems while also
protecting and ensuring the safety of public health workers.76 African nations can also set up
of a network of experts on public health emergencies for future needs.77

Fifth, there is a need to encourage the development of a regional post-pandemic recovery

plan under AfCFTA to restore connectivity, tourism, normal business and social activities,
prevent potential economic downturns, boost confidence, and improve stability of the region.78
Other measures could also ensure that the most exposed economic sectors and workers are
given support to ensure their fast-track recovery.79 For example, small traders in export-
dependent countries of Mozambique, Niger, Nigeria, and Uganda can be provided with direct
income transfers along with assistance to diversify trade from China. Moreover, tourist-
dependent island countries can implement tourist-assistance schemes including checks at the
airport, special health police, availability of doctors and hospitable beds on an emergency call,
increased spending on advertisements to attract tourists, while also providing alternative
income schemes for those dependent on tourism industry. However, these measures are likely
to attract a substantial fiscal cost. Perhaps LDCs could request monetary assistance from
the richer signatories of the AfCFTA during crisis periods to alleviate this burden.

Sixth, although African LDCs mainly export primary commodities to the world and import
essential items like medicines and foods, they are important players in the global supply chain.
Given the global slowdown and myriad of trade restrictions initiated by countries, there is an
imminent threat to Africa’s trade and overall growth prospects. Perhaps, these LDCs can
utilize the platform presented by the AfCFTA and sign preventive plurilateral
agreements with their main trading partners located outside the continent to prevent any
disruptions in the flow of essential commodities during times of crisis and pandemic.
Moreover, these plurilateral commitments may also be extended to other LDCs in the WTO as
they have the potential to present immediate benefit for trade and growth as was the case with
the Bali package of 2013.80 This will help mitigate the likely catastrophic health and economic
impacts of such a crisis in the future and protect the most vulnerable LDCs.

75 Ighobor Kingsley, “AfCFTA: Implementing Africa’s free trade pact the best stimulus for post-COVID-19 economies”, 15
May 2020, https://www.un.org/africarenewal/magazine/may-2020/coronavirus/implenting-africa’s-free-trade-pact-best-
stimulus-post-covid-19-economies , (accessed on June 28, 2020).
76 “ASEAN declaration and statements on Covid-19”, 1 May 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/210.pdf (accessed on June 24, 2020).
77 Ibid
78 Ibid
79 “Statement on COVID-19 by APEC Ministers Responsible for Trade”, 8 May 2020,
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/GC/213.pdf (accessed on June 24, 2020).
80 Jatkar and Mukumba, , “Unpacking the Bali Package: A Snapshot of the Bali Ministerial Decisions of the WTO Members”.

14
Seventh, there is an urgent need for new measures to minimize disruptions to food
systems and ensuring food security during and after the COVID-19 pandemic. Food
insecurity is a cause of concern throughout most of Africa, but especially in West Africa where
food supply is scarce and countries depend on imports of basic foods crops such as rice and
wheat from Asia.81 Short term measures may include setting up emergency food reserves and
subsidizing inputs for the production of basic food crops such as Maize and Wheat. While in
the long term, LDCs can boost domestic food production by incorporating advanced and more
mechanized methods. Coupled with a strong diversification agenda, these countries can reduce
their dependence on international food supply by reshaping supply networks and strengthening
regional food chains. Perhaps these countries could also bargain for protection against
disruptions in imports of staple food grain when they sign any new free trade agreements
in the future.

In conclusion, Africa has been experiencing growth in trade over the last few years, however,
the continent needs more international trade agreements to support its growing, yet fragile
export sector. This crisis has presented an opportunity for the continent to take more concrete
steps towards realization of the AfCFTA as countries make concerted efforts to harmonize their
trade-related regulations, customs controls, and reduce both tariff and non-tariff barriers, while
improving the infrastructure and addressing connectivity issues to lower logistics costs.82 There
is also a strong case to amend the present text of the AfCFTA to strengthen the participation
of industries located in the LDCs in regional value chains, reduce vulnerability in supply of
food and essential goods as well as make the African economies resilient to future pandemics
and crises. Assistance to meet excessive fiscal costs during a crisis and maintain trade networks
could be made a central theme in all future negotiations of any bilateral or regional trade
agreement by the African LDCs.

81African Union. “Meeting of African Ministers for Agriculture Declaration on Food Security and Nutrition during the Covid-
19 Pandemic”. 16 April 2020.
82 Douglas Zhihua Zeng, “How will COVID-19 Impact Africa’s Trade and Market Opportunities?”, 2 June 2020,

https://blogs.worldbank.org/africacan/how-will-covid-19-impact-africas-trade-and-market-opportunities (Accessed on 3 July

2020)

15
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